Is a PayPal Working Capital Loan Ideal for Your Small Business?

PayPal has evolved into a key player in the e-commerce game and with its established online loan program available for small businesses, are its services ideal, convenient, and “small business- friendly?”

Considering PayPal Working Capital currently offers its financial services for small businesses in the US, UK, Australia, Germany, Mexico and just recently, Canada (for select PayPal business account holders), it seems to be doing something right.

Online lending for short term business loans has certainly given traditional banks a run for their money. After all, it’s not uncommon for small businesses to be plagued by the “high risk factor,” causing small businesses to find other means of borrowing through the likes of personal financing, equity, private financial institutions, hard money lenders, or business credit cards.

Designed for small businesses with a strong PayPal sales history, a PayPal Working Capital Loan is more or less a merchant cash advance, but is technically a loan. To qualify, small business owners are first required to select the amount of funds they require and the maximum amount depends on a business’ PayPal sales. A percentage of future PayPal sales is then determined and will be put towards repayment and an associated fixed fee. Upon approval, the funds will be received within minutes, according to PayPal Working Capital.

Once the funds are released, the first payment is automatically made approximately 72 hours from your bank after receiving the funds and a percentage of each PayPal sale is deducted until the loan and fixed fee are paid in full. However, it’s important to remember that the higher the PayPal sales, the faster the loan is repaid. In the event a business doesn’t conduct any sales through PayPal for a few days or longer, a minimum repayment of 5 or 10 percent of the loan every 90 days is required to ensure good standing.

Other Loan Specifications Include:

Pricing/Fees: Small businesses only pay one fixed fee that is known of in advance. There are no late fees, early repayment fees, hidden fees, or interest. The fixed fee is determined by a business’s PayPal sales, account history, the amount of funds that were required, and the predetermined repayment percentage.

Repayment: Weekly payments are automatically withdrawn from your bank account.  Additional repayments can be made without additional charges.

Flexible Terms: According to PayPal Working Capital, a small business owner can determine (or provided with choices) the amount of funds and percentage of repayment that fits a business’ needs.

While another viable option to obtain funds for essential operating costs, PayPal Working Capital is worth looking into for your small business if additional funds are required. However, it’s always best to visit www.paypal.com/workingcapital for all the details and the benefits that it may provide for your small business.